Oil Prices Surge 10% as Iran Conflict Sparks Fears of Supply Shock, Analysts Warn of $100-per-Barrel Scenario

Global oil markets were jolted over the weekend after reports of intensified military action involving Iran sent shockwaves through energy trading circles, pushing crude prices up by as much as 10 percent in over-the-counter trading. Brent crude, the international benchmark, surged to around $80 per barrel on Sunday, as traders and analysts alike braced for further volatility when markets reopen.

The sharp rally capped a strong upward trend that had already seen oil prices rise steadily throughout the year. On Friday, Brent crude closed at $73 per barrel — its highest level since July — driven by mounting fears of geopolitical instability in the Middle East. Those concerns intensified dramatically following U.S. and Israeli strikes on Iranian targets, which analysts say could tip the region into a broader and more protracted conflict.

Energy experts warn that the biggest risk to oil supply is not just the fighting itself, but the growing threat to shipping through the Strait of Hormuz, a narrow but vital waterway through which more than 20 percent of the world’s oil supply passes each day. Tehran has reportedly warned vessels against navigating the strait, prompting tanker owners, oil majors, and trading houses to suspend shipments of crude oil, refined fuel, and liquefied natural gas through the route.

Ajay Parmar, Director of Energy and Refining at ICIS, said the potential closure of the strait represents a worst-case scenario for global energy markets. According to him, while military conflict typically supports higher oil prices, the disruption of Hormuz traffic would have a far more severe and immediate impact.

“If we see a prolonged outage of the Strait of Hormuz, prices could open much closer to $100 a barrel and potentially exceed that level,” Parmar warned, noting that alternative routes can only compensate for a fraction of the lost supply.

Analysts estimate that even with partial rerouting through Saudi Arabia’s East-West pipeline and Abu Dhabi’s export infrastructure, a full or near-full closure of the strait could remove between 8 million and 10 million barrels per day from the global market. Such a shortfall would represent one of the most significant supply shocks in recent history.

Other market watchers share similar concerns. Helima Croft, an analyst at RBC Capital Markets, said Middle Eastern leaders have cautioned Washington that a full-scale conflict involving Iran could drive oil prices well beyond the $100-per-barrel mark. Meanwhile, analysts at Rabobank struck a slightly more conservative tone, forecasting prices to hold above $90 per barrel in the near term if tensions persist.

Adding another layer of complexity, the OPEC+ group announced plans to raise output by 206,000 barrels per day starting in April. However, the increase represents less than 0.2 percent of global demand, leading many analysts to conclude that it would do little to offset a major supply disruption caused by geopolitical conflict.

Energy consultancy Rystad also expects prices to jump sharply when futures trading resumes, predicting an immediate rise of around $20 per barrel, which would push Brent crude close to $92.

The unfolding Iran crisis has already prompted Asian governments and major refiners to reassess oil stockpiles, shipping routes, and alternative supply sources. Analysts at Kpler noted that countries such as India may increasingly turn to Russian crude to compensate for potential losses from the Middle East, underscoring how the conflict could reshape global energy flows.

For oil-importing nations, the surge in prices threatens to worsen inflationary pressures and strain government finances. For producers, particularly those with limited capacity to ramp up output quickly, the situation presents both an opportunity and a test of fiscal discipline.

As markets await the reopening of futures trading, one thing is clear: unless tensions ease rapidly, oil prices are likely to remain volatile, with the possibility of $100-per-barrel crude no longer a distant threat but a near-term reality.